SHAREHOLDERS' EQUITY

12 Months Ended

Jun. 30, 2013

SHAREHOLDERS' EQUITY

SHAREHOLDERS' EQUITY

9. SHAREHOLDERS' EQUITY

Series A Preferred Stock

        In January 2000, we issued 3,000 shares of Series A Convertible Preferred Stock for net proceeds of $2,604,190. The stated value was $1,000 per share and par value is $0.001. This series was non-voting and had a dividend rate of 4%, payable at conversion in either cash or shares of common stock, at Hyperdynamics' option. During 2000 and 2001, 1,055 shares were converted to common stock. As a result, 1,945 shares remained outstanding at June 30, 2010. By terms of the original agreement, the preferred shares were convertible into Hyperdynamics' common stock at a price equivalent to the lower of the trading price when purchased of $5.25 or 80% of the current 5-day trading average. All or any of the stock could be converted at any time at the holder's option. According to the terms of the agreement, all preferred shares outstanding as of January 30, 2002 were to be automatically converted to common stock. If the Series A stock had been converted at that time, approximately 607,750 shares of common stock would have been issued (after giving effect to the 1-for-8 Reverse Stock Split effected July 1, 2013). This conversion did not occur because of legal claims filed by both the Series A shareholders and Hyperdynamics against each other.

        Since the outcome was not known and no conversion had been effected, Hyperdynamics continued to accrue dividends on the 1,945 shares through September 30, 2004. Management evaluated the accrual as of September 30, 2004 and determined the accrual should be discontinued. Management reevaluated the accrual periodically and considered the accrual to be adequate to cover the liability, if any, pursuant to the lawsuit.

        On December 30, 2010, we entered into a settlement agreement pursuant to which we issued 29,930 shares of our common stock (after giving effect to the 1-for-8 Reverse Stock Split effected July 1, 2013) in connection with the conversion of 1,945 outstanding shares of Series A Preferred Stock. As part of the settlement, we were relieved of any Series A Preferred Stock dividend payments, two former officers agreed to the cancellation of an aggregate of 100,000 warrants which had an exercise price of $32.00 and 938 shares of our common stock were surrendered to us (in each case, after giving effect to the 1-for-8 Reverse Stock Split effected July 1, 2013). As a result of this agreement, we were not required to issue the full amount of convertible securities under the terms of the Series A Preferred and we did not have to pay $372,000 of dividends we previously accrued as payable which represented accruals through September 30, 2004.

Common Stock issuances

        On July 1, 2013, the Company effected a reverse stock split in which each eight shares of the Company's common stock was reclassified and combined into one share of Common Stock. As such, we have retrospectively adjusted basic and diluted earnings per share, Common Stock, stock options and prices per share information for the Reverse Stock Split in all periods presented.

Year ended June 30, 2013

For exercise of options:

        During the year ended June 30, 2013, 95,000 options were exercised for cash at an exercise price of $3.92 for total gross proceeds of $0.4 million.

For exercise of warrants:

        There were no warrants exercised during the year ended June 30, 2013.

Shares Issued in Severance Agreement:

        On May 16, 2013, we issued 84,375 shares of our common stock with a fair value of $0.4 million to a former employee as part of a severance agreement. Sale of the shares is restricted for the first 6 months after which 37,500 of the shares issued are eligible to be sold. The remaining 46,875 shares become eligible to be sold 12 months from the date the shares were issued.

Year ended June 30, 2012

For cash:

        On February 2, 2012, we closed the sale of 1,250,000 shares of our common stock and warrants to purchase 1,250,000 shares of our common stock in a registered direct public offering. The net proceeds to us from the offering were approximately $28,162,000. The warrants had an exercise price of $28.00 per share, became exercisable in August 2012, and expired in April 2013.

For exercise of options:

        During the year ended June 30, 2012, 100,625 options were exercised for total gross proceeds of $670,000. The options were exercised at prices ranging from $2.48 to $16.00.

For exercise of warrants:

        During the year ended June 30, 2012, we issued 42,526 shares of common stock upon the cashless exercise of warrants to purchase 53,750 shares of common stock.

Year ended June 30, 2011

For cash:

        On November 3, 2010, we entered into a Stock Purchase Agreement with two institutional funds under management of affiliates of BlackRock (collectively, the "Investors") pursuant to which the Investors agreed to purchase an aggregate of 1,875,000 shares of our common stock at a purchase price of $16.00 per share in a private placement. At closing, we received approximately $29.9 million, net of offering costs.

        On March 25, 2011, we entered into an underwriting agreement providing for the offer and sale in a firm commitment underwritten offering of 3,125,000 shares of our common stock at a price to the public of $40.00 per share ($38.00 per share net of underwriting discount but before deducting transaction expenses). In addition, we granted to the Underwriter a 45-day option to purchase up to 468,750 additional shares of common stock from us at the offering price, less underwriting discounts and commissions. On March 25, 2011, the Underwriter exercised its option with respect to all 468,750 shares.

        Closing of the sale of the shares of common stock, including the 468,750 shares purchased pursuant to exercise of the option by the Underwriter, was held on March 30, 2011. The Company received net proceeds, after underwriting discounts and commissions, and other transaction expenses, of approximately $136.1 million.

For exercise of options:

        During the year ended June 30, 2011, 107,327 options were exercised for total gross proceeds of $906,000. The options were exercised at prices ranging from $1.92 to $16.00.

For exercise of warrants:

        During the year ended June 30, 2011, 770,527 warrants were exercised for total gross proceeds of $7,709,000. The warrants were exercised at prices ranging from $7.84 to $12.64. Additionally, during the year ended June 30, 2011, we issued 48,106 and 21,964 shares of common stock to YA Global and a prior executive respectively upon the cashless exercise of warrants to purchase 87,778 and 30,000 shares of common stock respectively.

Issuance of common stock in Series A settlement:

        On December 30, 2010, we entered into a litigation settlement whereby we issued 29,930 shares of our common stock.